STOCKS
Almost all major stocks are trading higher today except Shanghai.
Dow (21892.43, +0.12%) has moved up to test immediate resistance near 21950. We wait to see if the index faces any rejection from here which could push it back towards 21750. Else a break above 21950 could indicate an extension on the upside for the near term.
Dax (12002.47, +0.47%) bounced back slightly but does not look very strong just now. Downside possibility remains open towards 11900-11800 while below 12300.
Sharp recovery on the Dollar Index and Dollar Yen has aided to a pull back in Nikkei too. Nikkei (19647.97, +0.72%) has clearly bounced back above 19600 and could now head towards 19700-19800 levels in the coming sessions.
Shanghai (3347.55, -0.48%) has shown first signs of rejection from 3375 levels and could come off towards 3275 in the near term before again bouncing back. Near term looks bearish.
Nifty (9884.40, +0.90%) held below 9925 yesterday too and could trade within 9800-9950 region in the near term as mentioned in our earlier editions. Sideways consolidation within the mentioned range is possible for at least another 3-4 sessions.
COMMODITIES
Although Gold (1307) had responded to its highly overbought condition and moved lower in line with our expectation, but there will be no change in the immediate trading range of 1280-1350, with a pivot at 1300 levels. We will remain bullish on gold while it is trading above 1280 regions. There was no such movement in Silver (17.32) yesterday, but it could also move lower towards 16.90 levels to gather fresh buying momentum.
Copper (3.08) is trading within the narrow range of 3.00-3.12. Only above 3.12, higher resistances of 3.26 can come into consideration. The only concern in the short term overbought condition which may drag the price towards 3.00 levels. But we will remain bullish on copper while it is trading above 2.88 levels in the medium term time frame.
10th consecutive weeks of fall (-5.4M B) in U.S oil inventory but there was hardly any refection on the price action. Brent (50.65) moved lower towards its channel support of 49.83 along with WTI (45.93), which is still trading within the midterm bearish channel. Thus We will remain neutral on Brent and WTI, while they are trading below 52.80 and 49 levels on a weekly closing basis.
FOREX
Strong recovery in the Dollar Index (93.00) from the low of 91.62 seen on Tuesday, just above 91.39, the 50% retracement of the earlier rise from 78.91 (May 2014) to 103.82 (Jan 2017). If the momentum of the current bounce continues, we may see 93.40 and 94.00-94.30 on the upside, but we also note trend Resistance at 93.25.
Higher than expected US Q2 GDP preliminary data yesterday (+3.00% against expectation of +2.7%) has helped the Dollar recover and induced further profit-taking in the Euro (1.1877). We have to see whether the near-term Support at 1.18 (mentioned yesterday) holds or not. If not, then a further dip to 1.1750 can be seen.
Further rise to 110.50 has been seen in Dollar-Yen (110.52) yesterday, in line with reading. Immediate Resistance seen at 110.65 now and then series of Resistances available up to 111.35. So, maybe we may see a bit of a corrective dip towards 110.10-109.90. Note that the Resistance at 132.00-25 is holding well enough on Euro-Yen (131.28) and can trigger an intra-day dip to 130.80-60 before a fresh rise towards 132.25-50.
Despite the bounce from 1.2773 to 1.2978 this week, the Pound (1.2911) is not displaying much strength. Given the recovery in the Dollar now, it may range between 1.2825-2925 for a few days while trying to figure out longer term direction.
The 200-week MA at 0.80 on the Aussie (0.7909) mentioned yesterday has held well and pushed the Aussie down. We need to see if the mentioned Support at 0.79 holds and propels the Aussie higher towards 0.81. Failure to bounce from 0.7900, or max 0.7865, would be a blow to the currently preferred bullish possibility.
Small recovery in Dollar-Yuan (USDCNY = 6.5962) as well. Dollar-Rupee trades 64.04/07 on the NDF and is expected to continue to move sideways between 63.90-64.10 in the near term.
INTEREST RATES
The German-US 2 Yr Spread (-2.10%) has dropped but the German-US 10Yr Spread (-1.77%) is hovering around between -1.79-1.75 regions. yesterday, Euro had moved lower, seems to be responding more to the German-US 2Yr Spread in short term time frame. If the German-US 2Yr Spread could manage to rebound from its support at -2.09-10 levels then it could possible pull up the Euro too.
The benchmark US 10Yr yield has rebound from 2.09 levels due to the positive GDP figures and expected to remain stable at current levels of 2.14 for the rest of the week. But there are rooms for further downside towards 1.97 if the US 10Yr will close below 2.09% on a daily closing basis.
Muted price action has been seen in the Japanese 5Yr JGB (-0.14%) and the 30Yr JGB (+0.83%) as they are hovering around their respective supports, suggesting a possible bounce in near term time frame.
UK 5Yr and 30Yr Gilt Yields find support at 0.42 and 1.56 levels and moved up (5Yr 0.44% and 30Yr 1.59%) but the 10Yr is still trading at 1.00 regions with no sign of recovery.
